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China woos Dimon, Musk as pressure builds on Xi to boost economy

Tesla Chief Executive Officer Elon Musk (in white) boards his private jet before departing from Beijing Capital International Airport. (Jade Gao/AFP via Getty Images/TNS)
June 01, 2023

China is rolling out the red carpet for global business leaders including Jamie Dimon and Elon Musk, seeking to allay fears the world’s second-largest economy is becoming more hostile toward foreign capital.

The chief executive officers of JPMorgan Chase & Co. and Tesla Inc. both met separately with senior Communist Party officials this week against a backdrop of tumbling Chinese markets and disappointing economic data.

Members of China’s powerful Politburo also sat down with executives from Starbucks Corp and Jardine Matheson in recent days, while top ministers welcomed leaders from investment firm Franklin Templeton and British semiconductor software company, Arm Ltd.

The flurry of engagement comes after an espionage probe into expert consultancies used by firms to operate in China spooked foreign investors. President Xi Jinping called protecting industrial security the “priority of priorities” at a high-profile meeting this month.

Nervousness around anti-foreigner sentiment comes as China faces a sluggish post-pandemic recovery, reporting weak manufacturing and export data, as well as a property slump. Geopolitics has also made investors wary, as U.S. President Joe Biden leads a global campaign to block China from high-end chips with potential military applications.

Foreign direct investment into China has plummeted, with investors pulling $30 billion out in the first quarter. The MSCI China Index is down more than 50% from its 2021 peak and foreign holdings of Chinese bonds fell again in April after rising slightly in March.

“Xi no longer needs rapid growth to justify his rule, but if the economy is doing too badly it will bring extra security risks for him,” said Alfred Wu, associate professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “That’s why China is still courting foreign investment and foreign businesses.”

“But security remains Xi’s highest priority,” he added. “If he sees any risks, China will not relent in tackling the foreign companies.”

This resumption of global business leaders engaging in person with Chinese officials recalled a friendlier era, after three years of Covid isolation closed China’s borders pausing such exchanges. Prior to the pandemic, Apple CEO Tim Cook had met Xi Jinping, for example.

While political leaders such as German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen used recent trips to China to press Beijing on hard topics such as its territorial claims on Taiwan and ties with Russia, this week’s meetings were strikingly positive in tone.

Tesla’s billionaire chief executive officer, Elon Musk used his sit down with Foreign Minister Qin Gang on Tuesday to voice opposition to U.S. decoupling from China, saying the interests of the two countries were intertwined, according to a government statement.

Musk, who has previously suggested Taiwan could be run as a special administrative zone of China, has enjoyed significant official support for his Shanghai-based Gigafactory. Tesla contributed almost one-quarter of Shanghai’s total automotive production value last year, and local authorities pledged earlier this month to boost ties with the company through autonomous driving and robot modules.

During a two-day trip, the Tesla chief sat down with officials from China’s foreign ministry, industry and information technology regulator and commerce ministry. By contrast, U.S. ambassador to China, Nicholas Burns, only met China’s foreign minister five months after Qin was appointed into his role, amid struggling bilateral ties.

Meanwhile, Shanghai party chief Chen Jining on Wednesday said he hoped U.S. banking chief Dimon could help bring more international financial institutions to Shanghai. Dimon had to publicly apologize in 2021 for making a joke about the downfall of the Communist Party, something neither side publicly addressed this week.

The meetings come after Chinese Commerce Minister Wang Wentao tried to assure foreign businesses that China would protect their interests and rights earlier this month. Wang also met U.S. Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai separately in the U.S., showing some effort to bolster sentiment.

Henry Wang Huiyao, founder of the Center for China and Globalization, said investors should view the recent exchanges as a “very positive” sign Beijing is open to foreign business.

“The recent emphasis on security concerns may come after spy charges and security reviews the U.S. government has put on Chinese nationals or companies,” he said. “These negative sentiments affect both countries.”

Chinese-owned social media app TikTok is currently under scrutiny for national security concerns, which could result in it being banned. Washington has also announced export restrictions on dozens of Chinese entities citing activities contrary to U.S. national security and foreign policy interests, in addition to the recent chip curbs.

In return, China has banned Micron Technology Inc.’s products from sensitive sectors and cracked down on overseas firms’ access to data, making it hard for investors to assess the economy. President Xi said earlier this week that China should improve “opening up security,” as it faces increased risks.

Michael Hart, president of the American Chamber of Commerce in China, said last month that the U.S. business community was afraid of being Beijing’s next target. “Irrespective of the government’s intention, that’s the message being received,” he said.

China’s wooing of high-profile figures in important sectors this week appeared to be an attempt to reverse that trend, as Beijing tries to thread the needle between protecting geopolitical concerns and bolstering the economy.

“The Chinese government is trying to find an equilibrium between security and development,” said Wu, the Singapore-based professor. “But that will be quite difficult to achieve.”


© 2023 Bloomberg L.P

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